Friday, May 23, 2014

All the choices are unacceptable, and there's not even a protest vote option.

Pro-euro parties guarantee Eternal Recession

Polish mainstream political establishment (all the way from far-left to center-right) is pro-EU to the degree that everything EU does is thoughtlessly accepted as amazing - and completely ignores all the genuine problems EU suffers from like creation of eurozone and lack of any real democratic accountability.

Euro was the single biggest mistake in the history of EU, and either abolishing euro or replacing ECB with something less disastrous are the only ways EU can ever exit its eternal recession and return to healthy economic growth.

In case you need the background - unlike most other central banks which are changed with keeping the whole economy in good order, European Central Bank has single mandate of "price stability", and by design is meant to ignore everything else about the economy. To make matters worse while "price stability" was traditionally understood to mean core (excluding highly volatile prices like food and energy) inflation of about 2%, ECB reinterpreted it to mean "as close to 0% inflation as possible". The last time core inflation was over 2% was in 2003, so ECB was not doing its job properly long before the crisis, and since then it's been a total disaster.

Such single-minded focus on inflation is a recipe for turning any kind of economic difficulty into an endless recession with ever-increasing debt levels and massive unemployment (which by unemployment hysteresis becomes pretty much permanent), which is exactly what happened.

Regardless of their mandate, all other central banks in the world have some kind of democratic accountability - if they're screwing too hard their mandate will be adjusted or central bankers replaced. This occasionally resulted in politicians intervening in monetary policy directly, so central banks typically balance this with some degree of operational independence, but ECB got the level of independence so extreme that they are completely unaccountable to anybody - it's just a dictatorship by committee deciding the fate of European economy.

Eurozone is also a horrible as an optimal currency area - without local currencies or capital controls capital flows freely between banks of different countries, which would be perfectly fine if some kind of banking union existed. Instead governments of each country implicitly guarantees private debt of all banks within their territory, with even a suggestion of creditor haircut considered a heresy.

This is a recipe for exactly the kind of disasters we've seen during the Great Recession - German banks lend ton of money to banks in eurozone periphery with no regard for risk, then when things got tough periphery countries became accountable for 100% of these risky loans (with their citizens never being consulted on any of that - if there's one thing EU bureaucrats hate the most, it's any kind of genuine democracy), which required massive austerity, which together with massive capital outflows led to the level of economic deterioration which made debts completely impossible to repay.

Any kind of common sense relief - like banking union, fiscal transfers, bond haircuts, accepting higher eurozone inflation, bonds guaranteed by all of eurozone members, letting insolvent banks fall without government guarantees etc. - are all instantly rejected by the EU bureaucracy, and EU bureaucracy has absolute control over eurozone monetary policy, voters be damned.

The only countries which came out relatively well out of recession were ones outside eurozone like Poland and UK, and ones who basically used it to steal money from the periphery countries like Germany did by forcing them to guarantee private banking loans.

And imagine that - half of Polish political parties want Poland to join euro. Even if this recession ends somehow, and so far nothing suggests that it ever will (Japan's lasts over two decades now with no end in sight), current structure of euro pretty much guarantees another, most likely even worse.

Anti-euro parties are all basically crazy

Between Smoleńsk and Korwin... OK, that was a cheap shot, but the right wing side of Polish politics took a massive turn into crazy direction lately. Even Korwin used to be a useful voice of dissent in early 90s back when he was just a low-government libertarian instead of going basically full neoreaction.

Even ignoring the crazies and the nationalists, the only people who don't think everything about EU are ones who want to pretty much dismantle the whole thing, and kick out all the foreigners while they're at it.

There's nobody who wants to turn EU into something workable - which at a minimum means ditching euro in its current form, and introducing an order of magnitude more democratic accountability than it currently has.

Does that mean I'm never voting again?

Not really. It makes sense to vote in elections to European Parliament based on policies parties have towards EU issues, since that's what they'll be doing. In national elections, domestic issues matter a lot more.

Not voting is a totally legitimate choice in any elections. When all choices are horrible, and my vote matters very little (since European Parliament has very little power), there's really no point in endorsing one or another of the horrible choices by voting for it.

To double check my decision I took the quiz on Latarnik Wyborczy website - and it seems I disagree with every single political party pretty much equally. Give it a try as well, maybe you care about other matters and don't consider euro or Smoleńsk as nonnegotiable issues like I do.

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